Federal Spending Cuts Could Cause Massive Layoffs

The automatic federal spending cuts scheduled to kick in January could trigger a massive round of layoff notices for federal contractors just before November’s presidential election, a move that could play havoc with President Barack Obama’s re-election.
The Washington Post notes that under federal law, most employers must notify workers of expected layoffs at least 60 days in advance. In other words, the notices would likely go out just before Election Day and the swing state of Virginia, home to many defense contractors, could be hard hit.

The Obama administration has charged that Republicans are playing up the prospect and the Labor Department said it would be “inappropriate” for contractors to send out layoff notices because it is unclear whether and how the budget cuts would occur, the Post reported.

House Armed Services Committee Chairman Rep. Howard McKeon, R-Calif., told the Post that “the president is focused on preventing advance notice to American workers that their jobs are at risk and on perpetuating uncertainty.”

The layoff battle is the latest wrinkle in the debate over the “fiscal cliff” that will occur should the Bush tax cuts expire and the governments fails to make a deal on the budget, a move that will force wide-spread automatic budget cuts.

Lockheed Martin has said it may notify more than 100,000 employees of potential layoffs ahead of the election, while Northrop Grumman and General Dynamics told the Post they have not decided on whether to issue layoff notices.

However, some view the layoff threats as a ploy.

“If it’s truly the intent of the defense industry to want to send out the mass notices, I think that is being triggered by their frustration over the uncertainty about the budget,” said Jack Raisner, a specialist in employment law, told the Post. “They’re manufacturing a hysteria about being forced to do it.”